Rachel Gearhart: Good morning, and welcome to Market Wake-Up Call. Our regular host, Steve McDonald, is still in Austria with Members. I’m Rachel Gearhart reporting from the Baltimore Clubhouse. Well, it’s just as cold here, and there’s less mulled wine, but to make up for it, here with me today is Emerging Trend Strategist Matthew Carr. Welcome, Matt.

Matthew Carr: Thanks for having me, Rachel.

Rachel Gearhart: Now, this is an exciting week for the Club. You’re about to introduce a feature to your service The VIPER Alert, and the rationale behind it is fascinating. So far this year, you have closed out 48 – yes, 48 – triple-digit wins, and we’re hoping to get all the way to 52 by the end of the year. We have a few more weeks. But that should average out to one triple-digit gain a week. Can you tell me about this new feature and how your track record plays a role in that?

Matthew Carr: Sure. First off, 48 triple-digit wins would average out to about one per week. Now, I had set this goal of 52 triple-digit wins for myself because it was a very high bar. You know, you try to challenge yourself and try to reach that. Going into 2019, I want to do even more than that. So one of the things that I’m doing is for the The VIPER Alert. We are instituting, for the first time ever, a new weekly recommendation beginning every Friday at 10:15 a.m. That is going to give people the chance to beat 52 triple-digit gains in a single year.

The VIPER Alert focuses on the small cap tech companies, which are called 20-20 small caps. These are companies that are experiencing more than 20% revenue growth year over year, as well as more than 20% earnings growth. So those fit perfectly in there, and you see, there’s a lot of momentum that can be made on these stocks. Now, I am asked a lot of times why I recommend stocks on Friday. It’s not just because of some random scheduling. It’s because there’s a lot of important data – economic data – that is released on Thursdays. Now, for small caps, Thursday actually, over the last five years, has been one of the worst trading days for the Russell 2000. That means if you’re buying stocks Friday mornings, you’re getting in at a very good price. I also go for 10:15 a.m. Again, there’s a whole reasoning and rationale behind that, and that’s because of the way the options markets work.

Rachel Gearhart: So your biggest winner so far this year was Vipshop (NYSE: VIPS) at 848%. You recommended the company in September 2017 and closed it out February of this year. Can you tell me about what inspired that initial recommendation?

Matthew Carr: Sure. Vipshop, right off the bat, fits right into this 20-20 small cap sort of perimeter. One of the things that I also like is to see companies and shares of companies that have been beaten down. So at that time, shares of Vipshop had fallen 43% from their 52-week high. So it was this value play. But it had been reporting more than 20% year-over-year revenue growth, and looking ahead we could see that revenue was going to accelerate. It was going to accelerate 29% in the third quarter and another 32% in the fourth. So we had discounted shares with a lot of this growth ahead of it. On top of that, in terms of the big, market-moving news, Singles’ Day is ahead of it. Now, Singles’ Day in China is celebrated on November 11. It’s a very simple, very popular holiday: If you’re single, buy something for yourself.

Rachel Gearhart: Retail therapy.

Matthew Carr: I always call it, you know, the “treat yourself” day from Parks & Recreation, but in real life. So in China, the celebration of Singles’ Day is an event that nothing in the United States can even come close to comparing to. So this year, Alibaba reported $31 billion just in 24 hours. That’s more than Black Friday, Thanksgiving and Cyber Monday, as well as that whole weekend, put together. So it’s a huge, massive event. We got in on Vipshop at this low – this discount e-commerce site in China that had all this tailwind behind it. So going into Singles’ Day, sales were excellent and reported a record going into Christmas and holiday spending, which is celebrated in parts of China. It picks up even more, and like I said, by the time we get to February, now we’ve got this 848% winner.

Rachel Gearhart: So do we think that the U.S. is going to start embracing Singles’ Day?

Matthew Carr: I actually think it’s only a matter of time because Alibaba has continued to push that holiday outside of China. In Southeast Asia, six new countries adopted that this year. It continues to expand further and further out, and it’s just a very simple holiday that most people would love. It fits right in with the holiday schedule here as well.

Rachel Gearhart: So then the next big question is: What is the next 20-20 company that checks all the boxes and has the same kind of 848% potential as Vipshop?

Matthew Carr: Once again, this is a company that just appeared in the system, and we just recommended it: Baozun (Nasdaq: BZUN). It’s almost the exact same setup. So we have shares of this e-commerce platform. It’s not actually a retailer, but it’s this online platform for all the other retailers. Shares were down 50% from their 52-week highs, but again, it’s this 20-20 company. And you can see that over the last four quarters, share revenue has grown at least 20% and earnings per share has grown at least 28%. And we can see that accelerating going forward because of that Singles’ Day holiday on the horizon. So we just bought into that. We’re already up double digits, almost, because of the momentum that has shifted in the market. We bought in at this low. You know, these trade tensions between the U.S. and China started to shift. That helps all those shares. So that, I believe, is another company that fits right into that same mold that Vipshop did, and I’m very, very excited about it going forward.

Rachel Gearhart: So you don’t see the trade war tensions causing any problems with any of these China e-commerce companies?

Matthew Carr: Not at this point. You know, for the last couple months, I’ve been very bullish on these Chinese e-commerce companies because of Singles’ Day and because they’d pulled back so much from those highs. Baozun was trading at more than $67 earlier this year. Now it’s at $34, so that’s a great deal.

Rachel Gearhart: Well, thanks so much, Matt. It’s hard to argue with a triple-digit win every week. And I don’t know about the rest of you, but I’m going to be watching my inbox at 10:15 a.m. on Friday for your next recommendation. As always, thanks so much for being here, Matt.

Matthew Carr: Thanks for having me.

Rachel Gearhart: That’s all for this edition of Market Wake-Up Call. I’m Rachel Gearhart.

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